U.S. stocks rise on hopes for budget deal

Tech sector leads the rally, buoyed by Apple, Texas Instruments

By

PolyaLesova

KateGibson

NEW YORK (MarketWatch) — U.S. stocks rose on Tuesday, with the S&P 500 Index gaining for a fifth consecutive session, buoyed by optimism that Republicans and Democrats will eventually reach a deal to prevent the automatic spending cuts and tax hikes set to go into effect early next year.

The S&P 500
SPX, -0.46%
advanced 9.29 points, or 0.7%, to 1,427.84 — its highest closing value since Nov. 6, the day of the U.S. presidential election. The technology sector was the biggest gainer Tuesday among the S&P 500’s 10 major sectors. Read: S&P 500 cracks major resistance.

The mood was buoyed by a report in The Wall Street Journal late Monday that budget negotiations between the White House and House Speaker John Boehner have made steady progress in recent days.

Addressing the House of Representatives Tuesday, Boehner said he was “hopeful” an accord would be reached. The Ohio Republican also said his party was waiting for President Barack Obama to outline specific spending cuts. Read: Republicans try to shift debate to spending.

Cliff talks appear to pick up steam

(6:04)

Negotiations between White House and House Speaker John Boehner are progressing steadily.

Stocks pared gains after Senate Democratic Leader Harry Reid said Tuesday afternoon that a deal to avoid the fiscal cliff will be difficult to reach before Christmas.

“The markets are holding out hope this is all a big bluff,” Ethan Harris, co-head of global economics research at Bank of America, said of the back-and-forth on Capitol Hill that has not yet resulted in an agreement.

Common sense would dictate that the White House and Republicans would reach a compromise to avoid going over the fiscal cliff, but allowing the battle to linger on raises the risk that a deal won’t be reached, according to Harris, speaking at a BofA Merrill Lynch conference in New York Tuesday.

“It’ll probably go to the last second, and there’s a decent chance we go over the cliff and it will be spring before this is resolved. There is a high risk Obama and Boehner agree in principle to a deal and Congress doesn’t approve it,” he added.

After surging as much as 136 points, the Dow Jones Industrial Average
DJIA, -0.59%
closed up 78.56 points, or 0.6%, to 13,248.44, its highest closing level since Oct. 22.

The Dow rose for a fifth consecutive trading session, marking its longest win streak since mid-March. Chip manufacturer Intel Corp.
INTC, -0.14%
was the top gainer in the Dow, rising 2.8%.

The Nasdaq Composite Index
COMP, -0.48%
climbed 35.34 points, or 1.2%, to end at 3,022.30.

More than 690 million shares traded on the New York Stock Exchange; composite volume topped 3.6 billion.

Shares of TripAdvisor Inc.
TRIP, -0.08%
rallied after Liberty Interactive Corp.
US:LINTA
said it acquired voting control of the hotel-reviews site.

Reuters

AIG shares rise as Treasury says it will sell its remaining stake in the insurer.

Apple’s shares rose 2.2%. ISI Group cited China Unicom’s announcement of more than 300,000 preorders for the iPhone 5 set to go on sale Friday. China Unicom is China’s second-largest wireless carrier.

Shares of Delta Air Lines Inc.
DAL, -1.27%
rose 5.1% after it agreed to acquire a 49% stake in Virgin Atlantic Airways Ltd. from Singapore Airlines.

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